Gold & Silver

Gold may consolidate, rise

Gnanasekaar T. | Updated on July 08, 2012


Comex gold futures ended lower on Friday as the monthly US jobs report spurred deflation fears, prompting investors to seek refuge in the perceived safety of the dollar and exit gold instead.

Data showed US non-farm payrolls grew at a less-than-expected pace in June.

The US workforce added just 80,000 jobs in June, below the forecast of 97,000. The unemployment rate remained static at 8.2 per cent, the Labor Department said.

Though this report could potentially push the US Federal Reserve closer to the additional monetary easing, which should help gold, a sharp sell-off in riskier assets across the board more than offset any hopes of Fed action for now. Also, perhaps because the US payrolls weren’t indicative of severe slowing that curtailed any expectation of easing.

Resistance

Comex gold futures continue to move in a volatile range. As mentioned in the previous update, initial resistance will be seen at $1,617-1,620 zone again followed by stronger resistance at $1,645-1,650 levels and failure to surpass this crucial resistance at $1,645 could result in a sell-off again.

A sideways consolidation is again under way with key supports in the $1,545-1,550 zone followed by critical support at $1,525.

While these two supports hold, we still hold on to our bullish view of a break above $1,645 opening the way up once again.

Only a daily close above $1,645 has the potential to test the critical trend line resistance at $1,695-1,700 levels on the upside or even higher to $1,785-1,800 levels.

The wave counts have to be revisited again as a possible fifth has ended.

Potential targets for the fifth wave have already been met. Prices have gone above $1,900 as an extension of the fifth wave. Fall below $1,600 confirmed that a corrective “A-B-C” has started.

It is possible that Wave “A” ended at $1,535 and a wave “B” ended at $1,804.

A possible wave “C” has possibly ended at $1,523. With the current price move going to $1,627, a broad corrective rally is still under way.

We will review the counts once we see an impulse move breaking the upside at $1,795.

RSI

The RSI is in the neutral zone indicating that it is neither overbought nor oversold.

The averages in MACD have gone below the zero line of the indicator hinting at bearishness once again.

Only a cross-over above the zero line again will indicate bullish strength.

Therefore, look for gold futures to consolidate and rise higher once again.

Resistances are at $1,615, $1,645 and $1,700 and Supports are at $1,560, $1,545 and $1,525.



(The author is the Director of Commtrendz Research and also in the advisory panel of Multi Commodity Exchange of India Ltd (MCX). The views expressed in this column are his own and not that of MCX. This analysis is based on the historical price movements and there is risk of loss in trading. He can be reached at gnanasekar_thiagarajan@yahoo.com.)

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on July 08, 2012
This article is closed for comments.
Please Email the Editor